Head of Chicago pension fund tried to collect an unearned union pension

Jason Grotto, Tribune reporter

James Capasso Jr. walked into a union pension fund office in 2002, announced he was retiring from Laborers' Local 1001 and applied for a pension.

The request was curious, considering Capasso had never held a paying job with Local 1001. In fact, he had been making more than $100,000 a year working full time as executive director of the Laborers' Annuity and Benefit Fund of Chicago, a city pension plan with more than $1 billion in assets.

It turned out that dues from union members had been set aside for Capasso with the Laborers' Pension Fund for Chicago and Vicinity as if he had been working for the local 30 hours a week for 18 years, union documents show.

The union pension fund eventually rejected Capasso's pension request. But the episode raises serious questions about how a college dropout with no prior experience became the executive director of a city pension fund — and why he was allowed to keep that job after the laborers union threw him out for attempting to collect a pension he was not entitled to receive.

At the city pension fund, Capasso is the official who allowed employees of Local 1001 and other unions affiliated with the Construction and General Laborers' District Council of Chicago and Vicinity to land inflated city pensions on top of their union pensions.

The state's pension code includes language aimed at stopping such double dipping by union officials, but Capasso adopted a narrow interpretation of the statute, interviews and records show.

His attempt to receive a union pension for which he didn't qualify led to a wider investigation of the district council's pension fund by the Laborers' International Union of North America, or LIUNA, the national union for hundreds of locals representing more than 500,000 laborers.

In 2004, LIUNA placed Local 1001 in trusteeship because of organized crime influence and improper pension contributions to about a dozen officials, including Capasso. The national union removed Capasso and a handful of officers from the local and barred them from returning to any LIUNA affiliate.

Aside from being bounced from the union, however, there were no consequences for Capasso. He got to keep his job at the city pension fund, not to mention his city pension, which will pay him roughly $96,000 a year when he retires.

Capasso declined to be interviewed about his union pension.

LIUNA held hearings in 2003 about the improper pension contributions. During his testimony, Capasso said that his ties to Local 1001 go back to 1958, when he became a union worker with the Department of Streets and Sanitation during a summer break from college. Capasso said he landed a city job after his aunt, a Local 1001 employee, called City Hall on his behalf.

He eventually left college to work full time for the city, according to his testimony. In 1967, when he was 25, Capasso's union colleagues appointed him as a trustee for the city laborers' pension fund. He would become the fund's executive director in 1986.

Union records show that Capasso became an unpaid auditor of Local 1001 in 1984. He was named to the post by the president of Local 1001 and the head of the laborers' district council at the time, Ernest Kumerow, son-in-law of reputed Chicago Outfit overlord Anthony Accardo.

Both the local and the district council have a long history of documented ties to organized crime. In the 1990s the groups were found to be so corrupt that LIUNA set up an office to police them under a consent decree with the U.S. Department of Justice.

"The organized crime syndicate known as La Cosa Nostra ('LCN') has at various times had a corrupting influence on the affairs of the (district council), various local unions comprising the (council) and other entities within the (council)," the 1999 consent decree states. "The LCN influence over the (council) presents special problems associated with endemic, long-term corruption."

Capasso's role as an auditor for the local was something of an honorary position because no duties were attached to the job, according to interviews and union documents. He also was not paid.

Yet for 18 years, union documents show, Local 1001 included Capasso's name on reports sent each month to the Laborers' Pension Fund for Chicago and Vicinity tallying the hours worked by union employees covered under the pension plan and recording the pension contributions required to cover those hours.

"That was my form of compensation as far as I was concerned," he testified to a LIUNA-appointed hearing officer about the 25,000 hours of pension contributions he received.

Under federal law, however, workers must earn a paycheck in order to receive retirement benefits because pension contributions are considered pre-tax compensation.

The reports that included Capasso's name were signed by two Local 1001 officials who were eventually ousted from the union because of ties to organized crime and pension fraud.

Bruno Caruso was removed from the helm of both Local 1001 and the Laborers' District Council in 2001 after investigators caught him meeting with organized crime figures. Caruso's brother Frank "Toots" Caruso and cousin Leo — both identified by federal law enforcement agents as members of the Chicago Outfit's 26th Street Crew — held positions at the district council as well as its affiliates.

Replacing Bruno Caruso as head of the local was Nicholas Gironda, who also signed remittance sheets for Capasso.

Gironda had been suspended and demoted from his $36,000-a-year job as a Streets and Sanitation refuse collection coordinator in 1991 for failing to catch ghost payrollers under his supervision. Among those who held a no-show city job: Leo Caruso.

Immediately after his suspension, Gironda was hired by Local 1001 as a field representative at a salary twice as high as his city pay, union records show. Gironda held that position until the city reinstated him in August 1993.

Three months later, the city granted Gironda a leave of absence to work full time for the union. When he retired from the city in 1998, he began drawing a city pension based on his union salary.

When Gironda applied for that city pension, which brings him about $73,000 a year, he stated he was not participating in a local union pension plan. Yet information obtained by the Tribune and WGN-TV shows that Gironda receives about $2,000 a month from the Laborers' Pension Fund for Chicago and Vicinity. He had received contributions in the plan since 1995.

In 2004, Gironda was ousted from the laborers union after LIUNA investigators found he had committed pension fraud by receiving contributions for hours he never worked and for signing off on contributions to others who didn't qualify for them — including Capasso.

Gironda did not respond to a written request for an interview.

Under a settlement agreement with LIUNA, Gironda was allowed to keep his union pension. He also continued to collect his city pension, as allowed under Capasso's interpretation of state law.